Tuesday, October 13, 2009

TEA Time in the Florida Keys

No, I’m not talking “tee time” at Ocean Reef (or “tea time” at Ocean Reef, for that matter.) I’m referring to the EB-5 Investor Visa definition for TEA: “targeted employment areas”. A “TEA” refers either a geographical area which has an unemployment rate of at least 150% of the national average OR a rural area. Of the 10,000 annual visas set aside for EB-5 Investors, 3,000 of them are set aside for TEA cases.Why is this important?Because TEA designation drops the required EB-5 investment amount from $1 million to $500,000.

And, as it just so happens, that wonderful paradise right in our own South Florida backyard, the Florida Keys (except for the City of Key West) meets the TEA definition, from the stretch connecting Key Largo to the tip of the Florida peninsual all the way to the city limits of the funky little city perched at the southwestern tip of my favorite archipelago, only 90 miles from the island where I come from…Cuba.

And this, my savvy readers, is a goodthing for both the Keys AND prospective EB-5 Investors. You see, the economic troubles we’ve seen in South Florida have not spared the island paradise, and just today The Miami Herald reported on the boom-to-bust reality of luxury developers who scarfed up campgrounds, trailer parks, marinas and dinky motels in hopes of turning them into uber luxury destinations and cashing in…only to watch it all fizzle.

According to the Herald article, “from Key Largo to Key West, at least 18 pricey projects screeched to a halt in 2007 and 2008.”But it isn’t just about developers left holding the bag, as the sympathy factor would be pretty weak…it’s about what those developers left behind in their rapacious appetite for profits. Trailer parks that once housed retirees have been leveled and cleared. Mom-and-Pop marinas where shuttered as developers tried unsuccessfully to change zoning density numbers with a wary MonroeCounty. In the words of the Herald:

“Today, the legacy of the Keys' land rush is a list of foreclosures, bankruptcies and litigation, some of it so complicated that developments have been left in indefinite limbo. One of the biggest: the $220 million MarlinBay Yacht Club in the Middle Keys. “

And it’s not like these developers were flush with cash. They did exactly what we, as a nation of homeowners, did: they borrowed. And borrowed.And borrowed some more. In fact, the Herald says that based on public records and disclosures by developers, those 18 high end projects previously mentioned in Keys collectively borrowed nearly$1 billion. (Can you even fathom the total figure if you add in all the speculative single family home construction which has failed just as spectacularly?) The best quote in the article sums up the perspective of those who, like me, have lived or still live in the Keys:

And so, like a knight in shining armor, the possibility of EB-5 investments stands as the most intelligent, feasible, and exciting recovery solution for both job creation AND affordable housing in the Keys. TEA designation for MonroeCounty – again, excluding the City of Key West – permits those two most powerful benefits an EB-5 Regional Center can offer: a pool of diversified private investment funds combined with direct and indirect job creation in an area where tourism drives the economy…and tourists drive over the sea.